Home Loans to Become More Affordable After Repo Rate Cut in 2025

Real estate developers and experts believe that the reduced rates indicate that borrowing costs for homebuyers and developers will also go down, which will further encourage investments in property.

The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) on February 7 decided to reduce the repo rate by 25 basis points (bps) from 6.5 percent to 6.25 percent, its first such move in five years.

Market observers said that a rate cut would not only enhance liquidity but also stimulate consumption and purchasing power, ultimately fuelling economic growth. Lower borrowing costs could give significant boost to the real estate sector, as reduced home loan interest rates serve as a major incentive for prospective homebuyers.

In May 2020 the RBI had last reduced the repo rate by 40 basis points to 4 percent to help the economy tide over the crisis during Covid-19 pandemic. The RBI, in May 2022 started hiking repo rates in view of the Russia-Ukraine war. The repo rates remained unchanged at 6.50 percent for two years.

Developers will benefit from easier access to funds, helping them complete projects faster and meet the rising demand, experts believe.

Source: Moneycontrol